How Much Does Google AdWords Cost?

If you’re wondering how much Google Ads would cost you and your business, the straight answer is that it depends on many factors.

There is no straight answer but luckily for you there are methods and tools to help gauge how much of an investment is needed.

Factors that affect Google Adwords costs include:

  • How much are you willing to invest? Do you have a budget?
  • Average price per click. The price is determined by the industry and location
  • Target words or keywords you want to highlight
  • How much your competitors are paying
  • The quality score of your keywords, campaign and account
  • Lifetime customer value or service lead value.

It is worth pointing out that AdWords operates on an auction system and this means prices constantly change based on demands. If a specific word is “on-demand”, expect that its price will increase.

Each business and industry is unique; trends come and go, and the competition amongst businesses will be a determining factor in the price you’ll eventually pay.

To give you a better understanding of prices, let me walk you through an example…

Finding Out Average Cost Per Click

Use a Google Keyword Planner. This is a useful tool with the sole purpose of finding keywords and suggested bids. Simply type in your keyword and location.

Google Keyword Planner is a simple enough application and pretty straightforward.

The tool will give you a list of suggested keywords based on relevance and their corresponding prices:

google keyword planner

Based on this example, the average cost per click is $11. While it may give you a clearer picture of costs, you shouldn’t stop here as there are still other variables that will come into play, like quality score (another word for “relevance”) but this is definitely a good base point to consider.

Whenever you use this tool, here are a couple of points we want to highlight:

  • Don’t forget to include other services and products you offer. In our example, a dental clinic would offer “cosmetic dental service”, “mouth guards” and such.
  • Locations are important. Don’t forget to include the city (Melbourne) and a suburb (Hawthorne). A localised search might give you a better result in the end.

Use as many keywords as you possibly can when you use this tool. Broadening your keywords will give a much better understanding of costs.

A dental clinic has a higher lifetime value, thus a business like this will garner higher click rates. For this reason, it is always wise to use as many Adword keywords as you can.

Estimating Your Daily Spend

Now that you have an idea of how much an average click will cost, it’s time to find out daily spend so that you know how many sales you need to cover those costs and let you earn money.

Let’s say that you have set a budget of $1500 a month, costing you $11 per click. You get around 136 clicks for this budget.

When you want to know what your conversion rate for this example, check this out:

  • A conversion rate of 5% will generate 7 enquiries
  • A conversion rate of 10% will generate 13 enquiries
  • A conversion rate of 20% will generate 27 enquiries

As for your daily spend, take into account that in a month there are about 21-23 business days.

Local businesses benefit the most when they limit ads during business hours.

Let’s say you decide to use 22 days and with a monthly budget of $1500, your daily spend would be around $70. However, if you are an online shop (which operates everyday at all times), then you may have to review the best times and days for conversion.

Reverse Engineering

Causation Versus Correlation in Marketing Strategy

Businesses don’t focus on clicks — owners want to see conversions, sales, and enquiries.

Knowing how many conversions you aim for in a month will give you an idea of how much adwords could potentially cost you.

If you already know your website’s conversion rate then it could act as a guide to how frequently we can convert those clicks without spending a single penny.

Adword traffic doesn’t convert at the same rate as organic SEO, and it’s important to keep this mind so your estimates don’t fly off the roof.

Keeping your estimates at the lower end makes starting an ad campaign less stressful and you have that leeway to adjust accordingly during the first month or so.

Looking at this example we can see that the dental clinic’s conversion rate is 10%:

google adwords conversion rate

What does this say about the website? This means that for every 10 clicks, there is 1 conversion. In the industry that the business is in, the average cost per click is $11.

Now that we have this information, we can safely assume that if we want to have 1 conversion a day, a minimum of 10 clicks is needed which will cost you to the tune of $110 a day.

A higher conversion rate means we can get more conversions (i.e. leads / sales) from the same amount.

Monitoring how the campaign will make an impact on your business on a monthly basis will give you a more accurate picture of how aggressive you can be with your online ads.

Reducing Costs Per Click

Any business owner would want to know if there is any way they can minimise costs and for Google Adwords, there are ways to reduce such costs.

One of the determining factors that Google uses in pricing per click is Quality Score and according to Google, Quality Score is affected by:

  • CTR – Click-through-rate
  • Relevance of each keyword to its ad group
  • Quality and relevance of the landing page
  • Relevance of the ad text
  • Quality score for your ads, campaigns and account.

How To Reduce Costs Per Click:

  1. Structure your campaigns
  2. Use single keyword ad groups
  3. Optimise ad copy and be relevant
  4. Optimising landing pages to be relevant
  5. Use sitelinks to improve CTR
  6. Use ad extensions to improve CTR
  7. Use the right match type i.e. broad match modifier instead of broad match.
  8. Use negative keywords to control relevance

Controlling What You Spend on Adwords

seo for google

You may think that spending on Google Ads is an investment (and it is!) but you should know when to draw the line and make sure that Google Ads is affordable and worth every dollar spent. The last thing you want is to waste money on clicks that don’t convert.

Sticking to our dental clinic example, it wouldn’t be wise to schedule ads at 11 in the evening when clinic hours are 9AM to 5PM.

What Can I Control with Adwords:

  • The maximum cost per click you’re willing to pay
  • When and where your ads will appear
  • What kind of format your ad appears in
  • The landing page
  • Cost of products and services on your website
  • How the website interacts with visitors
  • The maximum daily spend you’re willing to shell out

What I Can’t Control with Adwords

  • How much competitors are spending on cost per click
  • Their ad content
  • How they price similar products and services
  • Their website’s conversion rate
  • How often your ad will appear for certain searches or topics

A Final Word on Adwords CPC

  • Google Adwords operates on an auction system
  • Be in control of how your Adwords should be spent
  • Search networks cost a lot and you’ll be paying a premium fee of at least $3
  • Curious about how much the most expensive cost per click is? It’s at least $100 and these are keywords that are highly competitive.

At the end of the day wrapping your head around how Google Adwords should work to your advantage is not a problem when you contact PixelRush.

Setting up ad campaigns will be a breeze while we maximise your spend on clicks that matter and convert.

Want more marketing insights, tactics and strategies? Check out one of our most popular ever guides: 

Byron is the founder of a performance digital marketing agency specialising in Google Ads and eCommerce. His strategies have consistently delivered 6-12x ROAS in a diverse range of industries.

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